Linking Lack of Medicaid Expansion to Increased Medical Debt – An Unsurprising Connection, An Opportunity to Address It

At the end of August, we celebrated the 56th anniversary of the enactment of Medicaid, lifting up its multitude of benefits and improvement in access and outcomes. However, not everyone had something to celebrate – 12 states have refused to expand Medicaid for childless adults, meaning not everyone in the country enjoys the full benefits of this important program. In addition to missing out on the benefits of Medicaid, individuals in these states also suffer more financially and accrue more debt than their counterparts in expansion states. 

A new study published in JAMA confirms that in 2020 medical debt soared to $140 billion, making unpaid medical bills the largest contributing factor to personal debt in the United States. Even more startling, though unsurprising, is where that debt is concentrated. This new report tells us that nearly 18 percent of people nationwide had medical debt and though varying widely by state, medical debt is concentrated in the 12 non-expansion states. 

Eight of the 12 non-expansion states are in the South – a region that has long borne the brunt of structural racism and health inequities and continues bearing those adverse impacts in all aspects of their health and lives. The differences between states that have expanded Medicaid and those that have not is stunning. We see higher levels of debt in non-expansion states, as well has a greater number of accounts being sent to collection in those states, as compared to expansion states. Additionally, the study shows that in states that have expanded Medicaid, new medical debt dropped by a staggering 44% as compared to non-expansion states (10%) over the same time period. 

Uninsurance is one of the factors driving high medical debt. All of the nearly 2.2 million people (nearly 60 percent of those are people of color) in the Medicaid coverage gap are among the hardest hit.  

While medical debt affects people across demographic backgrounds, Black and brown people incur proportionately greater amounts of medical debt compared to their white counterparts. According to the U.S. Census, nearly 28 percent of Black households and just under 22 percent of Hispanic households had medical debt in comparison to 17 percent of white non-Hispanic households. Data from the Urban Institute show similar results: One in four people with medical debt in collection are people of color.  

The JAMA study did not look at medical debt incurred during the COVID-19 pandemic; however, a number of preliminary research inquiries showed medical debt disproportionately affecting Black and Latinx people – who have been the most likely to lose income during the pandemic, become uninsured and get sick from COVID-19. Meanwhile, many of the top 100 hospitals (including for-profit, non-profit, and safety-net hospitals) use predatory patient billing practices to sue patients over unpaid medical bills. Between 2018 and 2020, nearly 39 thousand lawsuits and other court actions were taken against patients. Legal debt collection actions are more frequent within communities of color. Black communities, in particular, are overwhelmed with lawsuits over unpaid medical bills, seeing liens put on their homes and bank accounts, and their wages garnished.  

Medical debt has lasting financial consequences on patients. Over one–third of the 5,450 people participating in a recent survey conducted by the Commonwealth Fund reported using up all or most of their savings and taking on credit card debt to pay for medical bills. This led to many of them being unable to pay for basic necessities like food or rent, or having to delay educational or career plans. Further, the damaging effect of medical debt on credit ratings can have lasting impacts on their ability to build wealth, such as obtaining mortgage loans, employment or saving for retirement.   

As we work to recover and rebuild our nation, one of the important steps needed is for Congress to take up Medicaid expansion as part of the upcoming reconciliation package. Studies from 2014 to 2020 showed Medicaid expansion has led to positive outcomes not only in patients’ financial well-being, but also in their health outcomes. Indeed, Black adults with cancer living in states that expanded Medicaid are more likely to be diagnosed at early stages and receive timely treatment, and thus, have better chances of surviving cancer than those living in non-expansion states. Medicaid expansion was also associated with a statistically significant reduction in maternal morbidity among low-income people as having access to preconception care helps optimize women‘s health, manage their chronic disease and addresses risk factors of both the mothers and their babies. 

While celebrating all of the good that Medicaid has done since its inception, we should take bold actions to address Medicaid eligibility barriers for all lawfully present by eliminating the five-year waiting period and find a coverage solution for the states that have refused to expand Medicaid. If we’ve learned anything in the last year, it’s that our health is interdependent – we all do better when everyone, regardless of where in the country they live, does better.